Correlation Between TFS FINANCIAL and ATRESMEDIA

Can any of the company-specific risk be diversified away by investing in both TFS FINANCIAL and ATRESMEDIA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining TFS FINANCIAL and ATRESMEDIA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between TFS FINANCIAL and ATRESMEDIA, you can compare the effects of market volatilities on TFS FINANCIAL and ATRESMEDIA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in TFS FINANCIAL with a short position of ATRESMEDIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of TFS FINANCIAL and ATRESMEDIA.

Diversification Opportunities for TFS FINANCIAL and ATRESMEDIA

-0.47

Correlation Coefficient

TFS FINANCIAL  ATRESMEDIA

Very good diversification

The 3 months correlation between TFS and ATRESMEDIA is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding TFS FINANCIAL and ATRESMEDIA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATRESMEDIA and TFS FINANCIAL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on TFS FINANCIAL are associated (or correlated) with ATRESMEDIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATRESMEDIA has no effect on the direction of TFS FINANCIAL i.e., TFS FINANCIAL and ATRESMEDIA go up and down completely randomly.

Pair Corralation between TFS FINANCIAL and ATRESMEDIA

Assuming the 90 days trading horizon TFS FINANCIAL is expected to under-perform the ATRESMEDIA. In addition to that, TFS FINANCIAL is 1.2 times more volatile than ATRESMEDIA. It trades about -0.02 of its total potential returns per unit of risk. ATRESMEDIA is currently generating about 0.21 per unit of volatility. If you would invest  431.00  in ATRESMEDIA on December 30, 2024 and sell it today you would earn a total of  89.00  from holding ATRESMEDIA or generate 20.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

TFS FINANCIAL  vs.  ATRESMEDIA

TFS FINANCIAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TFS FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TFS FINANCIAL is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

ATRESMEDIA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ATRESMEDIA are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile technical and fundamental indicators, ATRESMEDIA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TFS FINANCIAL and ATRESMEDIA

The main advantage of trading using opposite TFS FINANCIAL and ATRESMEDIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TFS FINANCIAL position performs unexpectedly, ATRESMEDIA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ATRESMEDIA will offset losses from the drop in ATRESMEDIA's long position.

The idea behind TFS FINANCIAL and ATRESMEDIA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.